INCENTIVE STOCK OPTION
_________________________, Optionee:
ALANEX CORPORATION (the "Company"), pursuant to its 1996 Equity
Incentive Plan (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). The grant of this
option and the issuance of shares upon the exercise of this option are also
intended to be exempt from the securities qualification requirements of the
California Corporations Code pursuant to Section 25102(o) of that code. Defined
terms not explicitly defined in this agreement but defined in the Plan shall
have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total
number of shares of Common Stock subject to this option is ________ (_________).
2. VESTING. Subject to the limitations contained herein,
__________ of the shares will vest (become exercisable) on the ____ day of each
month following ______________ and __________ of the shares will vest on the
final month. Vesting will be continuous until either (i) you cease to provide
services to the Company for any reason, or (ii) this option becomes fully vested
on _____________. [Vesting schedule subject to change from time to time as
determined by the Board of Directors, however, option must vest at least 20% per
year.]
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) Exercise Price. The exercise price
of this option is ___________________________ ($___________) per
share, being not less than the fair market value of the Common Stock on the
date of grant of this option.
(b) Method of Payment. Payment of the exercise
price per share is due in full upon exercise of all or any part of each
installment which has accrued to you. You may elect, to the extent permitted
by applicable statutes and regulations, to make payment of the exercise price
under one of the following alternatives:
(i) Payment of the exercise price per share
in cash (including check) at the time of exercise;
(ii) Payment pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board which,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise
the Company's Common Stock is publicly traded and quoted regularly in the
Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value
on the date of exercise; or
(iv) Payment by a combination of the
methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. The minimum number of shares with respect to
which this option may be exercised at any one time is one hundred (100), except
(a) as to an installment subject to exercise, as set forth in paragraph 2, which
amounts to fewer than one hundred (100) shares, in which case, the number of
shares in such installment shall be the minimum number of shares, and (b) with
respect to the final exercise of this option, this minimum shall not apply. In
no event may this option be exercised for any number of shares which would
require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
6. TERM. The term of this option commences on __________,
19__, the date of grant, and expires on ______________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3) months
after the termination of your Continuous Status as an Employee, Director or
Consultant with the Company or an Affiliate of the Company unless one of the
following circumstances exists:
(a) Your termination of Continuous Status as an
Employee, Director or Consultant is due to your permanent and total
disability (within the meaning of Section 422(c)(6) of the Code). This
option will then expire on the earlier of the Expiration Date set forth above
or twelve (12) months following such termination of Continuous Status as an
Employee, Director or Consultant.
(b) Your termination of Continuous Status as an
Employee, Director or Consultant is due to your death. This option will
then expire on the earlier of the Expiration Date set forth above or twelve
(12) months after your death.
(c) If during any part of such three (3) month
period you may not exercise your option solely because of the condition set
forth in paragraph 5 above, then your option will not expire until the earlier
of the Expiration Date set forth above or until this option shall have been
exercisable for an aggregate period of three (3) months after your
termination of Continuous Status as an Employee, Director or Consultant.
(d) If your exercise of the option within three (3)
months after termination of your Continuous Status as an Employee, Director
or Consultant with the Company or with an Affiliate of the Company would
result in liability under section 16(b) of the Securities Exchange Act of
1934, then your option will expire on the earlier of (i) the Expiration Date
set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your Continuous Status as an Employee, Director
or Consultant with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you provide services to the Company or an Affiliate of the
Company as a consultant or exercise your option more than three (3) months after
the date your employment with the Company and all Affiliates of the Company
terminates.
7. EXERCISE.
(a) This option may be exercised, to the extent
specified above, by delivering a notice of exercise (in a form designated by
the Company) together with the exercise price to the Secretary of the Company,
or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then
require pursuant to subsection 12(f) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of
any exercise of this option, the Company may require you to enter an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of this option; (2) the lapse of any substantial risk of forfeiture to
which the shares are subject at the time of exercise; or (3) the disposition of
shares acquired upon such exercise;
(ii) you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of this option grant or within one (1)
year after such shares of Common Stock are transferred upon exercise of this
option; and
(iii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Act, require that
you not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one
hundred eighty (180) days) following the effective date (the "Effective
Date") of the registration statement of the Company filed under the Act as
may be requested by the Company or the representative of the underwriters.
You further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
8. TRANSFERABILITY. This option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. OPTION NOT A SERVICE CONTRACT. This option is not an
employment contract and nothing in this option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
10. NOTICES. Any notices provided for in this option or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the address specified below or at such other address as you hereafter
designate by written notice to the Company.
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
____________________________
By__________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Alanex Corporation 1996 Equity Incentive Plan
Notice of Exercise
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE _________
(Initial)
OTHER __________________________
__________________________
__________________________
__________________________________
OPTIONEE
Address:__________________________
__________________________
